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IT Complexity, Costs Driving Cloud Adoption

The challenges of managing information technology are weighing ever more heavily on in-house IT departments across all sectors. Coupled with the economic difficulties of the last couple years, these challenges are pushing IT in some profoundly new directions, according to research firm Gartner, which said the result is a notable swing toward cloud-based services that's expected to fuel unprecedented growth in cloud computing over the next several years.

"The scale of application deployments is growing; multi-thousand-seat deals are increasingly common," said Gartner Research Vice President Ben Pring in a statement released to coincide with a new report issued by the firm this week, "Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014." "IT managers are thinking strategically about cloud service deployments; more-progressive enterprises are thinking through what their IT operations will look like in a world of increasing cloud service leverage. This was highly unusual a year ago."

In 2009, expenditures on cloud services worldwide and across sectors totaled $58.6 billion. That's expected to jump nearly $10 billion to $68.3 billion by the end of this year and to $148.8 billion in 2014, according to the report. The report also indicated that software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) expenditures by enterprises will reach $112 billion over the next five years.

Gartner's Pring partially attributed the trend to the growing need of IT organizations to control costs.

"After many years of germination, most notably in the SaaS arena, the core ideas at the heart of cloud computing--such as pay for use, multi-tenancy and external services--appear to be resonating more strongly," Pring said. "In part, this can be explained by macroeconomic factors. The financial turbulence of the last 18 months has meant every organization has been scrutinizing every expenditure. An IT solution that can deliver functionality less expensively and with more agility (remembering that time is money) is hard to ignore against this backdrop."

Gartner added the burdens of "complex, custom, expensive solutions managed by large in-house IT teams" have grown, leading IT organizations to call on cloud computing services to relieve them.

The United States is currently the largest consumer of cloud services worldwide, accounting for 60 percent of overall expenditures in 2009 and 58 percent in 2010, according to the report. This percentage will drop to 50 percent by 2014, though actual expenditures will be significantly larger than they currently are: $74.4 billion in 2014 versus $35.16 billion in 2009.

In terms of broad sectors, the report cited financial services and manufacturing as early adopters, along with "communications and high-tech industries." The public sector, Gartner said, "is also clearly interested in the potential of cloud services and its share of the overall market."

A few of the potential barriers to more rapid adoption cited by Gartner were the perception of security vulnerabilities inherent in cloud computing, service availability, and "vendor viability and maturity."

"Many enterprises may be examining cloud computing and cloud services, but are far from convinced that it is appropriate for their requirements," Pring said. "We expect that this will be a significant opportunity for existing IT services players to evolve their current offerings--such as outsourcing, system integration, development, etc.--to become cloud-enabled and try to combine the best of the two worlds, namely traditional IT services and cloud computing."

The full report is available now for $1,495. Further information can be found here.

About the Author

David Nagel is editorial director, education for 1105 Media's Public Sector Media Group and editor-in-chief of THE Journal. A 22-year publishing veteran, Nagel has led or contributed to dozens of technology, art and business publications.